Inflation and Monetary Policy: Practice MCQs with Notes
Notes and 21 practice MCQs on Inflation and Monetary Policy for OPSC ASO, OAS, OSSC and OSSSC.
On this page
Inflation and monetary policy
Inflation measured by CPI (NSO; RBI's target — 4% ± 2% under the Monetary Policy Framework 2016, Urjit Patel Committee) and WPI (Office of Economic Adviser, DPIIT; base 2011–12).
Types: demand-pull, cost-push, creeping (<3%), walking, galloping, hyperinflation; stagflation; deflation; disinflation; headline vs core (excludes food and fuel).
Monetary Policy Committee: 6 members (3 RBI incl. Governor, 3 government nominees); Governor has a casting vote.
Tool
Effect of raising it
Repo rate
Loans costlier → less money → inflation falls
CRR
Banks keep more cash with RBI → less lending
SLR
More money locked in govt securities
Open Market Operations — selling bonds
Absorbs liquidity
Marginal Standing Facility
Emergency borrowing (repo + 0.25%)
Practice questions
Sourced from the Odisha Public Service Commission where applicable.
opsc.gov.in.
EduSaint is not affiliated with OPSC.